Implosion (26 page)

Banerjee escalated the row in December 2006 when she went on a hunger strike for 25 days, but Tata went ahead with construction work in January 2007. This led to fresh demonstrations that continued through the year and at least two farmers committed suicide. Tata had been allocated 997 acres, but the Trinamool argued that it only needed 600 acres, which provided a fresh basis for opposition. Tata said the other 397 acres were needed for 55 component suppliers’ factories. Compromises were sought to exclude those acres and to allow some 2,000 objectors and others not receiving compensation to stay on their land, which Tata rejected.

Both the factory and the jobs could have been saved, had it not been for the two stubborn and emotional people involved. One was Banerjee, who was focused single-mindedly on political victory in the 2011 assembly elections, with little care for the economic and social damage she caused along the way. The other was Ratan Tata, encouraged by his controversial public relations adviser, Nira Radia, who was regularly in Kolkata liaising on the Singur negotiations. A peace deal was eventually brokered by West Bengal’s governor, Gopalkrishna Gandhi,
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on 8 September, and Banerjee called off her protests. This did not, however, sufficiently guarantee the future of the project for Ratan Tata, who had refused to attend the governor’s talks, saying they were political rather than industrial.

Both sides took irreconcilable positions. Banerjee probably felt secure with the thought that Tata would not leave because it had invested $350m in the factory’s workshops and assembly lines that were virtually complete, and the car launch was planned for a few weeks later. She also probably assumed it could not quickly find an alternative site. Both assumptions were wrong. Ratan Tata had earlier accused industry rivals of encouraging the opposition
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but now he was exasperated by a series of thefts from the plant site, and by intimidation and assaults on engineers including Japanese and German experts who were installing machinery. He announced the withdrawal on 3 October and made an emotional departure after personally attacking Banerjee.
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‘We have to shift because of Mamata Banerjee,’ he declared.
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He quickly chose a new site in Gujarat, where he was welcomed by Narendra Modi, the chief minister.

Of the 13,500 people (mostly landowners but including a few hundred others such as share-cropper tenants) on the 997-acre site, 11,000 had by this time accepted and received compensation while the other 2,500 (with 297 acres) had either refused the money because they were unwilling to hand over their land, or had their payments held up in ownership disputes. Some people had already been employed on or around the project – about 180 were working for Tata and its component suppliers, while about 650 were in supporting services and over 900 were receiving technical or semi-technical training.
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Once the land transfer was fixed, none of the 13,500 had any rights to the land under the 1894 legislation so, when Tata departed, they lost both their old agricultural livelihoods and the one-job-per-family that Tata was offering. They also lost the prospect of other future employment – there would have been 1,500 jobs in the Tata factory, plus thousands more in consequential manufacturing and service activities. (The automotive industry estimates that total employment can amount to more than five times the basic figure).
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Banerjee promised during her election campaign that, when she became chief minister, she would provide nearly 400 acres of land to the 2,500 people who had not received compensation (though only 297 acres were available, of which 220 belonged to the unwilling category). One of herfirst moves when she was elected was therefore to pass the Singur Land Rehabilitation and Development Act cancelling Tata’s ownership rights. The government then took possession of the land at night without giving adequate notice to Tata, and without offering the company compensation. Tata spotted flaws in the Act and started a case against the government, which included a compensation claim for its lost investment – estimated at Rs 500 crore out of a total expenditure of Rs 1,500 crore. In mid-2013 the Supreme Court suggested Tata consider returning the land to the previous owners,
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but it was no longer suitable for agriculture.

When I visited the site a few weeks after Tata had left, those without jobs were destitute. Biswanath, a 42-year-old, had given up his half-acre land and said he had been beaten up by Trinamool activists for doing so. Expecting a Tata job, he’d distributed the Rs 300,000 he had received in compensation among seven brothers and two sisters, and had spent his own share. ‘Now I am consuming alcohol,’ he said.

The main lesson to be drawn from both the Singur debacle and the Nandigram crisis is the need for a company to be closely involved in community affairs in order to build local trust and support among those being displaced. This has to happen even if the state government is purchasing the land because it is the company that can give assurances about the future, including the possibility of jobs. Tata stayed largely aloof and, though it had medical teams working in the area, did not try to secure community endorsement for the project by explaining how the 997 acres would be used and by spelling out the job and other benefits that the factory would bring.

This was odd because the group had faced more community opposition in different parts of India than many other companies. Tata Steel had learned the need for involvement at the Kalinganagar project in Odisha where 12 tribal people had been killed in 2006. Till then, Tata had left the Kalinganagar consultations with the state government, but it changed tack and took over the job of resettlement, realizing it needed to build trust with the local people. Hemant Nerurkar, a former managing director of Tata Steel, has said the company learned the hard way the necessity of consultation and communication with local people in proposed areas of development, particularly those at risk of displacement.
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Speaking at the Jaipur Literature Festival in January 2013, he said, ‘We went and communicated, communicated and communicated with the people most of us don’t understand the local feelings.’
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Kalinganagar marked a turning point in attitudes over how to handle the transition of agricultural land for industry. National and regional politicians, along with companies, realized that a more cooperative stance had to be adopted, and that fed into the debate on new land legislation. Ratan Tata, however, did not apply that lesson at Singur and he underestimated the importance of harnessing local support – a few weeks after he had departed, there were still big signs saying ‘Welcome Mr Tata’ along the highway and many smaller posters on walls and telegraph poles calling for him to come back. The area had begun to prosper with small new eateries and services such as taxi firms opening up. Life could have been good, if only Ratan Tata and his people had been more involved in local affairs, and Mamata Banerjee less so.

POSCO

POSCO is the latest of a string of multinational mining companies that have tried unsuccessfully to start projects in the eastern coastal state of Odisha. Its plans involve what would be India’s biggest ever inward foreign direct investment. Manmohan Singh personally gave his support, but the project was just too big, too foreign, and too high profile to have had an easy start almost anywhere in India. In Odisha, where there is a history of blighted projects, it had no chance. It is now many years behind schedule – thefirst four million tonnes per annum phase was to have been commissioned in 2010 but continuing protests and fear of riots makes it unclear when construction will begin.

The POSCO story is important because it shows how easy it is for a potentially large contributor to India’s economic growth to be stalled, even when it is a well-meaning company. POSCO cannot itself be blamed for the delays because, aside from any possible dealings with individual politicians and bureaucrats, it does not appear to have tried to bend regulations or mishandle people living on the site. It seems to have been badly advised because it did not realize that it takes several years for such a project to progress, and it chose the wrong site. It wanted to be on the coast so that it could export iron ore – an ambition that set the company on the road to controversy in the early days.

POSCO came to India looking for iron ore reserves and downstream customers to bolster its position as the world’s fourth largest steelmaker. It signed an MoU with the Odisha government in 2005 and expected to move ahead quickly with what would be the first-ever integrated steel project undertaken on a greenfield site by any steel company outside its home country. Other Korean companies – notably Hyundai Motor, LG and Samsung – had become market leaders in India for their autos and consumer electricals manufacturing and marketing businesses in the 2000s, so POSCO could never have envisaged more than a short delay when it arrived.

‘We’ll try to win the heart of the people, and believe we can achieve that,’ Cho Soung-Sik, chairman and managing director of POSCO India told me, three years into the delays. The agreement with the Odisha government included a private port, an SEZ, and iron ore mining rights. POSCO planned to commission the first 4mtpa phase in 2010 but, three years later, it had obtained neither the steelworks land nor the port site, nor had it secured separate iron ore mining rights. Jairam Ramesh gave heavily qualified environmental clearances in 2011, but this was challenged by a petitioner at India’s National Green Tribunal, which suspended the approval in March 2012.
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Meanwhile, the state government began acquiring land for thefirst 2,700-acre phase of the project, and after large-scale protests and clashes with police over blocked access to the site,
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this was completed by July 2013. The project, however, still faced continuing local resistance and bureaucratic hurdles.
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When I visited the site in September 2008,
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my car bumped along a track beside a broad sweep of bright green and well-cultivated paddy fields. We stopped at a rough bamboo gate at the entrance to Dhinkia village, guarded by a group of villagers in order to block access by POSCO, the government and police. This was the stronghold of Abhaya Sahu, a local official of the Communist Party of India (CPI), who rigidly controlled the resistance movement. Though the opposition was coming from a tiny fraction of the land area, it was crucial because it controlled access to the proposed new port. Sahu moved there in 2005, after the killings at Tata’s Kalinganagar plant raised the profile of project demonstrations. He set up the POSCO Pratirodh Sangram Samiti (POSCO protest and resistance committee), hoping this would establish the CPI as a political force in the area. Members of POSCO staff were briefly kidnapped by Sahu’s group in May and October 2007 when they visited the steelworks site, and one protestor was killed during a clash between villagers and labourers building an access road for POSCO in 2011. Sahu was temporarily imprisoned on various charges in 2008 and 2011 when the government was trying to reduce his power.

Sitting on a pink plastic chair and dressed – suitably for the hot, humid weather – in a white singlet and dhoti, he brusquely told me: ‘We will never let POSCO build here.’ Though it was a poor area, there was enough prosperity for people who wanted to stay. ‘This is fertile land,’ he said, referring to what the villagers called the local ‘sweet sand’ where they cultivated betel vines for labour-intensive crops of paan leaves. There were also cashew nut, fruit and rice crops as well as fishing. Most villagers lived in rough mud-plastered homes covered with straw roofs, but the betel-vine crop provided a good living for landless labourers of Rs 200 to Rs 250 a day, double the wages in other nearby areas, and Rs 20,000–30,000 a month for a family owning land. Sahu said he planned to start opposition later in POSCO’s iron ore mining area, where a leading BJP politician and former central government minister was also involved.

POSCO was promising bigger plots of land and homes on a nearby site to those who moved, plus compensation for existing homes and land, which had been accepted by other villages. There was also one job per family on offer in the steelworks (both during construction and after commissioning), plus job training for a second family member. Those who wanted to continue fishing, the company said, would receive assistance including a boat and nets, and POSCO would build a new wooden jetty. There would also be help and advice on animal husbandry and other occupations. ‘If people want more, we will negotiate,’ said Gee-Woong Sung, then POSCO-India’s project director, but this failed to break the deadlock.

The company’s experience illustrates what can happen when executives step outside territories they know well and try to operate in a political and bureaucratic culture which, they gradually discover, is very different from what they had expected. ‘POSCO can’t understand officials who don’t mean “yes” when they say “yes” and don’t mean “no” when they say “no”,’ an influential Odisha official told me in 2008, insisting on anonymity. The company also seemed to believe that blunt speaking would help. According to the same source, a very senior and impatient POSCO executive unwisely thumbed the company’s agreement in a government meeting and impatiently told officials they should ‘act on the agreement and hand over the land’– not quite the way to win friends and influence people in India. In July 2013, POSCO abandoned a planned $5.3m steel project in Karnataka after three frustrating years of delays and protests over use of land, but it is not pulling out of Odisha, presumably because the state government has provisionally allocated rich iron ore mines that make it worth staying on for, indefinitely.